Apollo AdvisingReturn on equity calculator
Type over the figures in the sentence. The result shows what the money tied up in your rental is earning in cash flow each year.
Check what your equity is earning
Type over the figures with your own property.
3.0%
is what your $300,000 of equity earns each year in cash flow, before appreciation and loan paydown. That is $3,000 a year for every $100,000 tied up in the property.
Short answer. Divide the rental's annual net cash flow by your equity, which is the market value minus what you owe. A rental worth $450,000 with a $150,000 loan that nets $9,000 a year earns 3% on its $300,000 of equity, before appreciation and loan paydown.
How it is calculated
Equity is today's market value minus your loan balance. Net cash flow is a year of rent minus every operating expense, the full mortgage payment, and a reserve for repairs and capital items. Return on equity is the second number divided by the first.
It leaves out appreciation, loan paydown, tax effects, and the cost of selling, so treat a low result as a reason to look closer rather than a verdict. The return on equity guide explains what the number does and does not tell you.
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Go deeper
Return on equity: the rental number most owners never checkHow to calculate it, why it drifts down as a property appreciates, and what it does and does not tell you about selling.The 1031 exchange timeline, step by stepThe 45-day and 180-day deadlines, the identification rules, and what to line up before you list.This tool is general education, not legal, tax, investment, insurance, or lending advice. Results depend entirely on the figures you enter. See our disclosures.